Inequality and Household Consumption: The Role of Intergenerational Support

Abstract The reduction of economic development inequality is widely recognized as a means of promoting household consumption. Using nighttime light data combined with household survey datasets from 2010 to 2020, this paper investigated the impact of inequality on household consumption in China. The results revealed a significant negative relationship, which remained robust after instrumental variable regressions and multiple robustness checks. The effect was strongest among married households with children and insignificant for those unmarried or without children. Further analysis showed that the inequality–consumption relationship varied with the gender composition, marital status, and the age of household heads, as well as the number and educational level of children, emphasizing the role of intergenerational support in shaping up the inequality–consumption nexus. The study found that increased government spending on education effectively alleviated the adverse impact of inequality on household consumption.